How Much Does Your Credit Affect What You Pay For A New Car | Refresh Financial
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How Much Does Your Credit Affect What You Pay For A New Car


Did you know, a low credit score can actually make a new car more expensive for you than it would be for someone with better credit.

Here’s why: when you have a lower credit score, lenders try to balance out the risk of giving you financing with a high-interest rate. The lower your credit score is, the higher an interest rate you’ll be offered. Interest adds up over time and in some cases, you could be paying thousands more for a car over the length of your financing.

So, how do we avoid high-interest rates on our car loans? By boosting our credit as fast as we can before we go get an auto loan. Here are three ways to get some extra points on your credit score fairly steadily:

1. Get a secured line of credit

A secured line of credit can be great for your credit. You just need to ensure you're paying off as much as you can each month on time and keeping all your other debts in good standing. A line of credit will usually have a much lower interest rate than a credit card, too. Your financial institution should be willing to help you rebuild your credit this way, but if they don’t, you can always combine the second and third options for a speedy credit boost.

2. Get a secured credit card

You do need some funds up front in order to secure your credit card but with the Refresh Secured Visa you can get away with as little as $200 and you’ll have a credit card in your name. Now, just make sure you pay it and all your other bills promptly, on time and more than the minimum payment and your credit will soar. Apply for the Refresh Secured Visa - one of the lowest fee and interest cards available - and we don't check your credit score!

 

3. Sign up for a credit building program

Unlike a secured credit card or a secured line of credit, you won’t need money up front to secure this program, as the principal acts as the security funds. Once you’ve paid off your program, the principal will be available to you - money you can then use as a down payment on your new vehicle. If you can't wait that long, you can even start to withdraw savings once you've paid off your commitment fee! Click here to find out more about Refresh's credit building program.

It’s important to note that if you have poor credit and applying for car loans at multiple places and keep getting denial after denial, you could end up lowering your score. Multiple credit checks from multiple places in a short period of time is one of the many things that can bring a credit score down. It’s far better to work on bringing your score up before you try to apply for auto financing. Work towards paying down your debts, get yourself a mix of the three options above, and your credit score will go up in no time. Then, go pick out your car and get a great deal!

 

Was your car loan declined?

If you’ve been declined for a car loan, don’t go looking for one at the bad credit car dealers who promise approval. Those car loans with bad credit you see are just going to get you in over your head.  Instead, just work on improving your credit. It’s not as scary as it sounds and if you’ve completed any of the steps above, you’ve already started on your way to better credit.

Identifying what problems there are on your credit report and working to fix them is a great next step. Following that, look into a secured credit card, a secured line of credit or a secured savings loan. Each of this are fairly easy to obtain even if you have poor credit, and each of these will report back all your good behaviour to the credit bureaus.

Learn more about the Refresh Financial Credit Building Loan - no money required up front, low interest, and a nice pot of cash at the end of the program to go along with your shiny new credit score!

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In February 2015, I tried to apply for a loan so I could pay off my school debts and my credit card. At least put a dent into my payments. Well, things went all wrong and I was denied for approval of a loan.

Refresh Financial contacted me, concerned as they are to help individuals like myself to have a better future. We went over my finances and decided that the Refresh Financial loan will bring up my credit score to apply for a loan.

I was greatly impressed when every month I saw my credit climbing to the numbers I wanted from the beginning. I was entirely happy for my credit score being higher. My job as well, I made it possible to pay bi-weekly on my payments. With that being said, I learnt to pay my outstanding bills instead of spending money.

I only not have better credit, I have better spending habits and I am happy with the results! ”

Jessica, Frog Lake, AB